Woolard v. Davenport, COA02-1757.

• Decision Date: 07 September 2004
• Docket Number: No. COA02-1757.,COA02-1757.
• Citation: 601 S.E.2d 319,166 NC App. 129
• Parties: Larry WOOLARD, Plaintiff, v. Jonathan DAVENPORT, individually and Jonathan Davenport d/b/a Davenport Ford Lincoln Mercury, Inc., Jonathan Davenport d/b/a Alliance Nissan, Inc., Davenport Ford Lincoln Mercury, Inc., and Alliance Nissan, Inc., Defendants.
• Court: North Carolina Court of Appeals

601 S.E.2d 319

166 NC App. 129

Larry WOOLARD, Plaintiff, v. Jonathan DAVENPORT, individually and Jonathan Davenport d/b/a Davenport Ford Lincoln Mercury, Inc., Jonathan Davenport d/b/a Alliance Nissan, Inc., Davenport Ford Lincoln Mercury, Inc., and Alliance Nissan, Inc., Defendants.

No. COA02-1757.

Court of Appeals of North Carolina.

September 7, 2004.

Bailey & Dixon, L.L.P., by Patricia P. Kerner and Hannah G. Styron, Raleigh and Hopkins & Associates, by Grover Prevatte Hopkins, Tarboro, for plaintiff-appellant.

The Twiford Law Firm, P.C., by John S. Morrison and David R. Pureza, Elizabeth City, for defendants-appellees Jonathan Davenport, individually and d/b/a Davenport Ford Lincoln Mercury, Inc.; Jonathan Davenport d/b/a Alliance Nissan, Inc.; and Alliance Nissan, Inc.

Wayland J. Sermons, Jr., P.A., by Wayland J. Sermons, Jr., Washington, for defendant-appellee Davenport Ford Lincoln Mercury, Inc. ELMORE, Judge.

The dispute giving rise to this appeal concerns the parties' attempt to effectuate the sale of the assets of an automobile dealership, WSB Motor Company, Inc. d/b/a Williamston Motor Company (WSB). Larry Woolard (plaintiff) contends he entered into an enforceable agreement with the following individuals and entities, for the purpose of ultimately transferring to defendant Davenport Ford Lincoln Mercury, Inc. (DFLM) the assets of WSB:¹ Jonathan Davenport (Davenport), both in his individual capacity and d/b/a Davenport Ford Lincoln Mercury, Inc. and d/b/a Alliance Nissan, Inc.; DFLM; and Alliance Nissan, Inc. (Alliance) (collectively, defendants). On 31 May 2000 plaintiff filed his complaint, alleging that certain of defendants' actions in connection with the transaction constituted breach of contract, breach of fiduciary duty, and unfair and deceptive trade practices.

Plaintiff's complaint characterized the parties' agreement as follows:

6. The Plaintiff and Defendants entered into several contracts which effectuated the transfer of assets and sale of the Plaintiff's business, [WSB]....

7. There was adequate consideration for all the contracts entered into between the parties but only when all the writings are taken together. Each individual writing constitutes a portion of the agreement between the parties. The entire agreement is fashioned in all the writings and therefore they all must be viewed as one contract with several writings evidencing a portion of the agreement.

....

Attached as exhibits to the complaint, and incorporated therein by reference, were the "several writings" that plaintiff alleges "all must be viewed as one contract" and when "taken together" constitute the "entire agreement" between the parties. Defendants assert that two of these documents are of particular importance in the present appeal: Exhibit C (the Sales Agreement), which sets forth such essential terms of the subject transaction as the parties, the assets to be transferred, the purchase price, and the closing date; and Exhibit A (the Management Agreement), which, in addition to identifying the parties, also defines certain rights and obligations of both defendant Davenport and plaintiff in connection with the transaction, both before and after the transaction's completion.

Exhibit C, the Sales Agreement, states by its terms that it "is entered into effective as of February 9, 1999, by and between WSB MOTOR COMPANY, INC., d/b/a WILLIAMSTON MOTOR COMPANY, a North Carolina corporation, hereinafter referred to as "Seller," and JONATHAN DAVENPORT, ... hereinafter referred to as "Buyer."" The Sales Agreement goes on to provide that "Seller is the owner of the business known and operated as Williamston Motor Company (the "Business").... Seller desires to sell to Buyer the assets of the Business." The Sales Agreement's signature block indicates it is to be executed on behalf of "Seller" by WSB's president. Plaintiff, therefore, is not a party to the Sales Agreement; instead, the corporate entity WSB is defined as the "seller" of the assets to be acquired in the subject transaction by defendant Davenport.²

Nor is plaintiff a party to Exhibit A, the Management Agreement, which by its terms is "entered into by and between WSB Motor Company, Inc., D/B/A Williamston Motor Company, a North Carolina corporation, ... and Jonathan Davenport," and was signed by plaintiff in his capacity as WSB's president. Pursuant to the Management Agreement, defendant Davenport "commence[d] service as the principle dealership management officer [of WSB] effective January 25, 1999" pending completion of the subject transaction. The Management Agreement obligated Davenport to "operate the dealership in an ethical and prudent manner... and otherwise maintain the goodwill and integrity of the dealership." Plaintiff's complaint alleges, inter alia, that defendants, through various acts and omissions, failed to so operate the dealership.

It is, however, undisputed that plaintiff is, and that WSB is not, a party to exhibits D through H attached to plaintiff's complaint. These exhibits include: exhibit D, which granted to defendant Davenport an option to purchase plaintiff's interest in certain real property; exhibit E, which set forth the terms by which defendant DFLM would lease from plaintiff and others the real property upon which the dealership was situated; exhibit F, which set forth the terms of plaintiff's participation in the operation of defendant DFLM; exhibit G, by which defendant DFLM agrees to timely service certain of plaintiff's loans; and exhibit H, a promissory note by which defendant DFLM agreed to make certain payments to plaintiff. In addition to the allegations regarding defendants' operation of the dealership, plaintiff's complaint also alleges that defendants breached various terms of the agreement set forth in exhibits D through H.

Defendants collectively answered plaintiff's complaint on 15 September 2000, denying generally plaintiff's allegations and asserting that plaintiff's complaint should be dismissed for failure to state a claim upon which relief can be granted, pursuant to N.C. Gen.Stat. § 1A-1, Rule 12(b)(6). The affirmative defenses asserted by defendants in their answer included neither failure to join a necessary party, failure to prosecute the action in the name of the real party in interest, nor lack of standing by plaintiff.³ The Rule 12(b)(6) motion contained in defendants' answer did not specify the grounds upon which the motion was premised. At the hearing on defendants' motion to dismiss, defendants argued, apparently for the first time, that because WSB, and not plaintiff, was signatory to the Sales Agreement and the Management Agreement — i.e., two of the several documents alleged in plaintiff's complaint to collectively constitute "one contract" and the parties'"entire agreement" — plaintiff lacked standing to sue on any claims arising from the agreement, and WSB was the real party in interest, in whose name any such claims must be prosecuted.

By order entered 23 September 2002, the trial court dismissed plaintiff's complaint with prejudice pursuant to Rule 12(b)(6), concluding that "the Complaint and the documents attached thereto and incorporated therein disclose facts that necessarily defeat Plaintiff's claims." On 7 October 2002, plaintiff filed a motion to alter or amend the judgment pursuant to N.C. Gen.Stat. § 1A-1, Rules 59(a) and (e) and 60(a) and (b). On 9 October 2002, plaintiff filed a motion to amend his complaint and join, pursuant to N.C. Gen.Stat. § 1A-1, Rules 17(a), 19, 20, and 21, WSB as a party plaintiff. Each of plaintiff's motions were denied by order entered 21 October 2002. Plaintiff now appeals (1) the 23 September 2002 order dismissing his complaint with prejudice for failure to state a claim, and (2) the 21 October 2002 order denying each of his post-judgment motions.

By his first assignment of error, plaintiff contends the trial court erred in dismissing, with prejudice, his claims for failure to state a claim upon which relief may be granted. Plaintiff specifically argues that his claims are not defeated by any facts disclosed on the face of his complaint and the several documents attached thereto as exhibits. After careful review, we agree.

The question presented by a Rule 12(b)(6) motion to dismiss is whether, as a matter of law, the allegations of the complaint, treated as true, state a claim upon which relief can be granted. Wood v. Guilford Cty., 355 N.C. 161, 166, 558 S.E.2d 490, 494 (2002). The effect of a motion to dismiss under Rule 12(b)(6) is to test the legal sufficiency of the complaint by presenting the question of whether the complaint's allegations are sufficient to state a claim upon which relief can be granted under any recognized legal theory. Isenhour v. Hutto, 350 N.C. 601, 604, 517 S.E.2d 121, 124 (1999). It is well-settled that a plaintiff's claim is properly dismissed under Rule 12(b)(6) when one of the following three conditions is satisfied: (1) the complaint on its face reveals that no law supports the claim; (2) the complaint on its face reveals the absence of facts sufficient to make a valid claim; or (3) the complaint discloses some fact that necessarily defeats the claim. Oates v. JAG, Inc., 314 N.C. 276, 278, 333 S.E.2d 222, 224 (1985). Documents attached as exhibits to the complaint and incorporated therein by reference are properly considered when ruling on a 12(b)(6) motion. Snug Harbor Property Owners Ass'n v. Curran and Snug Harbor Property Owners Ass'n v. Williams, 55 N.C.App. 199, 284 S.E.2d 752 (1981), disc. review denied, 305 N.C. 302, 291 S.E.2d 151 (1982).

In the present case, plaintiff asserted claims against defendants for breach of contract, breach of fiduciary duty, and unfair and deceptive trade practices. "The elements of a claim for breach of contract are (1) existence of a valid contract and (2) breach of the terms of [the] contract." Poor v. Hill, 138 N.C.App. 19, 26, 530 S.E.2d 838, 843 (2000). This...